301 Moved Permanently
301 Moved Permanently
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III.
Budget Results - Second Quarter 2009
Approved
Budget and Staffing Modifications
The 2009 Budget Resolution
delegated to the Chief Financial Officer (CFO) and selected other
officials the authority to make certain modifications to the 2009 Corporate
Operating
Budget. The following budget reallocations were made during the
second quarter in accordance with the authority delegated by the Board
of Directors
(they did not change the total 2009 Corporate Operating Budget
approved by the Board):
- In
April 2009, the CFO approved the reallocation of budget authority
within the Salaries and Compensation expense category of the
Ongoing Operations component of the 2009 Corporate Operating
Budget to reflect updated salary and benefit expense estimates
for all divisions and offices, except for the Office of Inspector
General. This reallocation followed a comprehensive analysis
of the approved authority for salaries, bonuses, and fringe benefits
as of March 31, 2009. Excess funds totaling $1,826,717 were identified
and reallocated to the Corporate Unassigned budget and will be
available to meet new budget requirements that emerge during
the year.1
- In
April 2009, the CFO approved the reallocation of budget authority
within the Ongoing Operations component of the 2009 Corporate
Operating Budget to provide funding for laptops and other equipment
for new employees and contractor staff. The Equipment expense
category of the Division of Information Technology (DIT) budget
was increased by $2,576,085, and the Corporate Unassigned budget
was decreased by the same amount.
- In April 2009, the
CFO approved the reallocation of $152,000 in budget authority
within the Salaries and Compensation expense
category of the Ongoing Operations component of the 2009 Corporate
Operating Budget from the budget of the Chief Operating Officer
(COO) to the budget of the CFO in connection with the addition
of a position in the CFO’s office to assume work responsibilities
transferred from the COO’s office.
- In April 2009, the
CFO approved the reallocation of $1,000,000 in budget authority
within the Ongoing Operations component of
the 2009 Corporate Operating Budget from the Corporate Unassigned
budget to the Outside Services – Other budget of the Office
of Public Affairs to continue the FDIC public service announcement
campaign and outreach focusing on deposit insurance and encouraging
the use of the enhanced Electronic Deposit Insurance Estimator
(EDIE).
- In May 2009, the CFO approved the reallocation of $34,595,471
in budget authority within the Receivership Funding component of
the 2009 Corporate Operating Budget from the Corporate Unassigned
budget to the budgets of the Division of Resolutions and Receiverships
(DRR), DIT, Division of Administration (DOA), and Corporate University
(CU) for the establishment of the temporary East Coast Satellite
Office (ECSO)2 . DRR received $20,386,767 (Salaries and Compensation
$18,333,467 and Travel $2,053,300); DIT received $6,619,277 (Salaries
and Compensation $403,632, Outside Services – Personnel $559,999,
Equipment $5,417,970, and Outside Services–Other $237,676);
DOA received $7,452,973 (Salaries and Compensation $1,049,425,
Buildings $4,039,212, and Equipment $2,364,336); and CU received
$136,454 (all in Salaries and Compensation) of the reallocated
budget authority.
- In May 2009, the CFO approved the reallocation of $8,533,213
in budget authority within the Receivership Funding component of
the 2009 Corporate Operating Budget from the Corporate Unassigned budget
to the Salaries and Compensation budget of DRR to fund 165 newly-authorized
positions.
- In May 2009,
the CFO approved the reallocation of $787,782 in budget authority
within the Receivership Funding component of
the 2009 Corporate Operating Budget from the Corporate Unassigned
budget to the Salaries and Compensation budget of the Office
of the Ombudsman (OO) to fund 12 newly-authorized positions. The
reallocation
was implemented in June.
The 2009 Budget
Resolution delegated to the CFO the authority to modify Authorized
2009 Staffing for divisions and offices, as long as those modifications
did not increase the total approved 2009 Corporate Operating
Budget. The following changes were approved by the CFO in accordance
with the
authority delegated to him by the Board of Directors:
- In April
2009, the CFO approved an increase of one authorized permanent position
in the CFO’s office to provide support to the COO’s staff
with its growing Board case review workload, and for work related
to Temporary Liquidity Guarantee Program (TLGP), Legacy Loans Program
(LLP), and other high priority initiatives. A budget adjustment was
made in the Ongoing Operations budget component in conjunction with
this approval.
- In April 2009, the CFO approved an increase of 38 authorized
positions (14 permanent, 24 non-permanent) in DOA. Most of these
positions were approved to address increased workload demands on DOA
in Washington
and Dallas that are attributable to factors other than the increase
in receivership and resolution activity and will be funded through
the Ongoing Operations budget component. The CFO determined that
sufficient funding would be available for these positions for the balance
of 2009
in that budget component through the reallocation of surplus
budget authority during the mid-year budget review process.
- In April 2009, the CFO approved an increase of one authorized
non-permanent position in the Office of Legislative Affairs to
assist with its rapidly growing workload and will be funded through
the Ongoing
Operations budget component. The CFO determined that sufficient
funding would be available for these positions for the balance of 2009
in that
budget component through the reallocation of surplus budget authority
during the mid-year budget review process.
- In May 2009, the CFO approved an increase of 12 authorized
non-permanent positions in OO. These positions will be distributed
equally among the Irvine, Jacksonville, and Dallas offices. A budget
adjustment was implemented in June in the Receivership Funding budget
component in conjunction with this approval.
- In May 2009,
the CFO approved an increase of 363 authorized non-permanent positions
for the temporary ECSO. The newly authorized
positions were in DRR (+343), DOA (+13), DIT (+5), and CU (+2).
A budget adjustment was made in the Receivership Funding budget
component in conjunction with this approval.
- In May 2009, the CFO approved an increase of three authorized
permanent positions in the Office of Enterprise Risk Management
to support its rapidly growing risk assessment workload associated
with the increase in the corporation’s business activities
and workload. These positions will be funded through the Ongoing
Operations budget component. The CFO determined that sufficient
funding would be available for these positions for the balance
of 2009 in that budget component through the reallocation of surplus
budget authority during the mid-year budget review process.
- In May 2009,
the CFO approved an increase of 165 authorized non-permanent positions
in DRR for its Dallas (+139), Washington
(+21), and Irvine (+5) offices due to current and projected workload.
A budget adjustment was made in the Receivership Funding budget
component in conjunction with this approval.
Spending Variances
Significant spending variances by major expense category and division/office
are discussed below. Significant spending variances for the six months
ending June 30, 2009, are defined as those that either (1) exceed the YTD
budget by $2 million and represent more than three percent for a major
expense category or total division/office budget; or (2) are under the
YTD budget for a major expense category or division/office by an amount
that exceeds $3 million and represents more than five percent of the major
expense category or total division/office budget.
Significant
Spending Variances by Major Expense Category
Ongoing
Operations
There were significant
spending variances in two major expense
categories during the second
quarter in
the Ongoing Operations component of the 2009 Corporate Operating
Budget:
- Outside Services-Personnel expenditures were $6.3 million,
or 8 percent, more than budgeted. Approximately $2.6 million of
this variance was attributable to expenses related to document
management services provided to DRR, which were erroneously charged
ton the Ongoing Operations budget component (this error will be
corrected during the third quarter). In addition, approximately
$1.9 million was spent on unbudgeted financial advisory services
obtained in connection with preparatory work for the proposed Legacy
Loan Program (LLP). The cost of contract services provided in support
of IT systems maintenance and server operations also exceeded budgeted
amounts during the quarter.
- Buildings
expenditures were $3.2 million, or 10 percent, less than budgeted.
The variance was due to delays in the relocation and build-outs
of the New York Regional Office, the Chicago Regional Office,
and the Boston Area Office.
Receivership
Funding
The Receivership Funding
component of the 2009 Corporate Operating Budget includes funding for
expenses that are incurred in conjunction with institution failures and
the management and disposition of the assets and liabilities of the ensuing
receiverships, except for salary and benefits expenses for permanent
employees assigned to the receivership management function .
There were significant
spending variances in five major expense categories through the second
quarter in the Receivership Funding component of the 2009 Corporate Operating
Budget :
- Salaries
& Compensation ($26.4 million, or 47 percent, less than
budgeted).
- Outside
Services - Personnel ($47.6 million, or 18 percent, less
than budgeted).
- Travel ($20.0
million, or 68 percent, less than budgeted).
- Outside
Services - Other ($8.7 million, or 63 percent, less than budgeted).
- Other
Expenses ($11.6 million, or 46 percent,
less than budgeted).
These variances occurred
primarily because bank closings have been less costly to administer
than anticipated due to the prevalence of structured and whole
bank transactions for the first six months of 2009; and budgeted positions
have not been filled as quickly as projected in the original
Board
approved budget. These factors led to lower-than-budgeted costs
for asset management and liquidation, outside counsel, travel, and
other
expenses. With the expected increase in bank failures and resolution
activities during the second half of the year, Receivership Funding
expenditures should increase each quarter as the number of bank
closings increases and the cumulative inventory of assets under management
grows.
Based on that assumption, we project that all or most of the
surplus budget authority in the Receivership Funding budget component
will
be utilized by year-end. Significant
Spending Variances by Division/Office3
Four organizations
had significant spending variances through the
end of the second quarter:
- DRR
spent $72.4 million, or 19 percent, less than budgeted. This
reflected the net impact of under spending of approximately $80.4
million in its Receivership Funding budget for the reasons identified
above and over spending of approximately $8.0 million in its
Ongoing Operations budget due to the coding error referenced
above, unbudgeted expenses for financial advisory services for
LLP, and higher-than-budgeted expenses for travel in connection
with recruiting and selection activities for the temporary West
Coast Satellite Office, travel related to IT systems, and employee
relocations.
- The Legal
Division spent $27.7 million, or 31 percent, less than budgeted.
Approximately $23.6 million of this variance was due to under
spending in its Receivership Funding budget because budgeted
positions were not filled as projected and bank closings and
resolution activities have required substantially less contractual
legal services to date than anticipated.
- DOA spent
$14.9 million, or 14 percent, less than budgeted. This variance
was largely attributable to delays in building out and relocating
employees to new office space in the Boston Area Office, the
Chicago Regional Office, and the New York Regional Office; temporary
delays in purchasing Furniture, Fixtures and Equipment for those
build outs; and lower-than-expected cost for leasehold improvements
due to landlord concessions at the temporary West Coast Satellite
Office.
- DIT spent nearly
$4.5 million, or 4 percent, more than budgeted. This variance included
approximately $1.0 million in unbudgeted
systems development and maintenance expenses in support of TLGP.
In addition, DIT accelerated its planned purchases of equipment, including
$1.0
million
for servers and $0.8 million for storage and network monitoring
software. Contract expenses for operations and control of the mid-range
IT platform
also exceeded DIT’s year-to-date budget by $1.3 million. Some of
these first half expenses may be offset by under spending during
the second half of the year.
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1The
Corporate Unassigned budget within the Ongoing Operations component
initially included only $2.5 million in unallocated funding approved
by the Board in December 2008 for unanticipated expenses related
to the implementation of TLGP, TARP, and other initiatives designed
to address the credit and liquidity problems within the U. S. economy.
As reported at the end of the first quarter, $1,749,368 was reallocated
to this budget in February 2009, in connection with adjustments to
the awards budgets of divisions/offices.
2The
Corporate Unassigned budget within the Receivership Funding component
initially included $64.2 million in unallocated funding approved
by the Board in December 2008 for budget requirements that emerge
during the year in conjunction with receivership and resolution
activities.
3Information
on division/office variances reflects variances in both the Corporate
Operating and Investment
Budgets.
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